Central Bank of India (CENTRALBK) Q2 FY23 Earnings Concall Transcript

Central Bank of India (NSE:CENTRALBK) Q2 FY23 Earnings Concall dated Oct. 20, 2022

Corporate Participants:

Raju —

M.V. Rao — Managing Director and Chief Executive Officer

Vivek Wahi — Executive Director

Analysts:

Sohail Halai — Antique Stock Broking Limited — Analyst

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Prabal Gandhi — Ambit Capital — Analyst

Sumair Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Unidentified Speaker —

Nimish Maheshwari — RSPN Ventures — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Q2 FY ’23 Earnings Conference Call of Central Bank of India hosted by Antique Stock Broking. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Raju from Antique Stock Broking. Thank you, and over to you.

Raju —

Yeah. Thank you, Yashashvi. Good afternoon, everyone. On behalf of Antique Stock Broking, I welcome you all to the Central Bank of India’s Q2 FY ’23 Earnings Call. I thank the management for providing this opportunity to host the call. From the — so from the management side, today we have with us Mr. M.V. Rao sir, CEO; Mr. Alok Srivastava, Executive Director; Mr. Vivek Wahi, Executive Director; Mr. Rajeev Puri, Executive Director; and Mr. Mukul, Chief Financial Officer.

Now, without further delay, I hand over the call to Mr. Rao sir for his opening remarks, post which we’ll have a Q&A session. Thank you and over to you, sir.

M.V. Rao — Managing Director and Chief Executive Officer

Yeah. Thank you, and good afternoon to all the participants. Before presenting the detailed performance figures, just I will give the key lights first — key highlights. Our total business now it stands at INR5.40 lakh crores and CASA is at 50.99% that is almost 51% of the total deposits, and gross advances stands at INR1.97 lakh crores. From the previous September, it is a growth of 12.20%. RAM portfolio, it stands at INR1.32 lakh crores with 13.37% growth.

Coming to the profit loss side. Operating profit, there is an increase of 20.97%. Now it has increased to INR1,445 crores. Net profit, now it stands at INR318 crores. Compared to the previous September ’21, that is INR250 crores, there is a growth of 27.20%. And interest income on advances has increased by 24.90%. Now it stands at INR3,577 crores. NII there is a growth of 24.52% and stands at INR2,206 crores. Regarding the NIM, it stands at 3.44% now. Cost to income ratio, it is decreased from the previous 55.38% to 52.21%. Slippage ratio, it is 0.54%. Earlier in September ’21, it was 1.45%. Credit cost. 2.59%, which was there in September ’21 now it has come down to 2.21% in September ’22, but if you remove the front-loaded aging provisions in September ’22, credit cost will stands at 0.92%. Asset quality. Gross NPA has reduced from 15.52% to 9.67% and net NPA 4.51% to 2.95%. And PCR stands at 89.20% and CRAR at 13.56%.

I’m coming to the details of business figures. Now, the total business has grown with 5.47% where advances have grown at 12.20% and deposits have grown at 4%, and CD ratio stands at 57.64%. Earlier in September ’21 it was 52.29%, now it has grown 535bps and it stands at 57.64%. And in the deposit mix, already I told you that CASA percentage stands at 50.99% that is total CASA deposits is INR1.74 lakh crores. And time deposits is INR1.67 lakh crores and total deposits is INR3.43 lakh crore. Total deposit growth earlier I was saying 4%, it is 1.96% Y-to-Y growth.

Credit performance. RAM has increased by 13.37% where retail has grown 18%, now stands at INR57,411 crores. Agriculture stands at INR39,870 crores with 7.88% growth. MSME stands at INR35,684 crores with 12.59% growth. Corporate, it stands at INR64,057 crores with 9.86% growth. Total gross advances stands at INR1,97,022 crores with 12.20% growth. Total credit RWA that is risk-weighted assets, it is at 65.04%. Total risk-weighted assets is INR1,28,138 crores. So previously this credit RWA was 65.41%. 37bps have come down. 65.04% is the present figure.

And coming to the loan book that is well-diversified. The way we are maintaining our balance in the credit book with RAM and Corporate, it continues to be with the balance of 65-35. And INR1.33 lakh crores is in the RAM segment and INR64,057 crores in the corporate book. So total is INR197 lakh crores. In the Retail segment also, major is dominated by the Home Loan segment with INR34,141 crores that is 59% of the total retail advance. And Auto loan is INR3,155 crores, Education is INR3,408 crores, Personal loan is at INR3,115 crores, and the Other retail loans are INR13,500 crores. So total this Retail segment is 29.14% of the total advance. And in agriculture, I already told you, that stands at INR39,870 crores and MSME, INR35,684 crores. This is total division of the Advances portfolio.

As far as the Rated category is concerned, there is an increase in AAA category. From earlier INR10,222 crores to INR18,251 crores. AA has increased from INR10,870 crores to INR13,505 crores. A rated has increased from INR4,585 crores to INR6,915 crores. So in the rated category, it has increased. Regarding the disbursements, in the Retail, Agriculture, MSME, when you compare with September ’21 and September ’22, total advances disbursements has increased to INR14,536 crores. In the previous September ’21 for the half year, that disbursements was INR7,162 crores. Almost disbursement was doubled. So now, total disbursements happened during this half year is INR14,536 crores.

And we have started one more stream that is co-lending that is going well. Now total outstanding stands at INR3,362 crores. In the previous September it was just INR355 crores. At that time, just we’ve started this portfolio. Now, almost INR3,000 crores have increased in this portfolio. Regarding the mandated targets, Bank has achieved all mandated targets whether it is a priority sector. Now, it stands at 54.13% against 40%. Agriculture advances stands at 22.45% against the 18%, Weaker sections, it stands at 17.48% against 11.50%, and Advances to small and marginal farmers, it stands at 11.85% of ANBC against the norm of 9.50%.

Regarding the financial performance. Our total interest income, now it stands at INR6,155 crores. Y-to-Y growth is 12% and quarter-on-quarter growth is 11%. And total interest expenses, it is now stands at INR3,408 crores that is Y-to-Y growth is 3.65%. So when it comes to the NII, it stands at INR2,747 crores with a growth rate of 24.52% Y-to-Y basis and quarter-to-quarter 28%. Total income stands at INR7,065 crores with a growth of 8.24% Y-to-Y and 11% Q2 quarter-on-quarter. And operating profit, now it stands at INR1,748 crores, which is 20.97% increase on Y-to-Y and 43% increase on quarter-to-quarter basis. Provisions, now it stands at INR1,430 crores that is 21% growth from Y-to-Y and 45% from quarter-on-quarter. And net profit that is INR318 crores. Compared to the previous September of INR250 crores there is an increase of 27% Y-to-Y basis.

And likewise, our fee-based income, there is slight dip in that. Y-to-Y there is a minus degrowth of 11.99%. It stands at INR910 crores when compared with the INR1,034 crores of the previous September, but with comparison after June ’22, it has increased 9.51%. Mainly, we have lost on the treasury side because of sale of investment earlier which was INR215 crores in September ’21. It has come down to INR31 crores in September ’22.

And coming to the Provisions. In NPAs, we — now we made INR1,070 crores that is 29.85% more compared to quarter-on-quarter. On year-to-year basis 3.95% lesser. And I already told you while — in saying about the credit cost, much of the aging provisions for the December and part of March quarter results is also accounted for. And standard assets provision stands at INR162 crores, income tax INR305 crores, total provisions is INR1,430.

And coming to the asset quality. Regarding the SMA accounts, which was 9.53% of the total advances in September ’21, now it has come down to 6.67%. Here we have included all types of advances, it is below INR5 crores, above INR5 crores, SMA 0, 1, and 2. So on the corporate side above INR5 crores, if you see it is only INR953 crores in September ’22, total SMA. In which SMA 0 is INR746 crores. We do not find any type of stress. It is only a matter of few days within which these accounts get regularized. Only INR169 crores is in the SMA 2. And likewise, upto INR5 crores, it is INR3,752 crores. So SMA accounts are also very much under control.

And coming to the gross NPA, which was 14.84% in March and 15.52% in September ’21, now it has come down to 9.67%. Likewise, in net NPA, which was 4.51% in September ’21, now it is below 3%. Now, it stands at 2.95%. Regarding the NPA movement, the opening balance was INR28,156 crores, and slippages for the entire — for this quarter is INR886 crores where INR777 crores is slippages from PA to NPA. And increase in the balance of existing NPA was INR109 crores. Total, INR886 crores. And wherein upgradation happened, INR499 crores. Recovery, it is INR719 crores. Regular write-off, it is INR82 crores, and technical write-off INR9,514 crores. And total is INR10,829 crores and the gross NPA stands at INR19,059 crores that is 9.67%.

And regarding the sector-wise NPA. In — Net NPA, retail it is 1.15%, agriculture 6.99%, MSME 4.02%, corporate 1.44%. So even within the retail sector, housing is 1.19%, vehicle loan 1.03%, education loan 3.66%, other personal segment loans 0.61%. So regarding the capital ratios, now we are comfortably at 13.56% with CET-1 of 11.62%, and Tier-II 1.94%, and leverage ratio is 4.51%. And regarding the coverage ratio, it is at 89.20% and NIM stands at 3.44% and the slippage ratio is 0.54%.

And the cost of deposits 3.89%. Yield on advances is 7.37%. And NIM, I already told you, 3.44%. Return on assets is 0.35% and return-on-equity is 1.31%. Book value per share is 28.09. Credit cost is 2.21%. When we take out the front loading of the provisions, it will stands at 0.92%. Cost to income ratio reduced from 55.38% to 52.21%, and business per employee now stands at INR17.13 crores.

And coming to the investment portfolio. And previously also in my interaction we used to say it is well-protected. Even in the month of March, June, we never had any M2M losses. Now also we maintain the same track record. And just to share with you in the AFS book, our modified duration stands at 1.55 and SLR 1.16. P.V. 01 is 4.12 and SLR 2.43. So entire book is protected against the fluctuations what we foresee.

And going forward, our guidance what we have given previously will continue to be there with the deposit growth of 8% to 10%. Advances growth slightly we have revised to 13% to 15% instead of 12% to 13%. Corporate credit 65-35, we will continue to maintain with plus or minus 5% variation. NIM will be around 3%. CASA we will try to maintain at 50%. Now, we are at 51%. And gross NPA, earlier we used to say that we will be reducing below 9% for the March ’23, but we should able to achieve below 10% in this half year itself. Going forward there will be further reduction in the gross NPA. And Net NPA, we have given 2.75%. We will see that in the next quarter that we will be reaching this number. And cost to income ratio, definitely we will be bringing below 50%.

This is from my side and if anything is from your side, I’m happy to share the further information. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question and answer session. [Operator Instructions]

We have our first question from the line of Sohail Halai from Antique Stock Broking. Please go ahead.

Sohail Halai — Antique Stock Broking Limited — Analyst

Yeah. Good afternoon, sir, and thank you for the opportunity. And congratulations in terms of a good set of results and also coming out of PCA. So I think so a lot of events, so hearty congratulations to you, sir.

M.V. Rao — Managing Director and Chief Executive Officer

Thank you.

Sohail Halai — Antique Stock Broking Limited — Analyst

So sir, in terms of the questionnaires, basically there are a couple of questions. So once that you are out of the PCA, how do you look at basically in terms of your risk appetite and growth? I understand that you still continue to focus on RAM portfolio, but if you could just share whether there would be any change in the trajectory in terms of the business growth that we are pursuing? That is first, sir.

M.V. Rao — Managing Director and Chief Executive Officer

Okay. See, as far as coming out of PCA, we are not going to change our business model drastically. And we will continue to hold the same line that is 65-35 with plus or minus 5%. So that is the combination in the credit book what we are — we have planned and we’re sticking to the same thing. And as far as the risk appetite is concerned, we are more focused on picking up the capital lite asset. If you see my RWA, which is still at 62% — sorry, 65% right now. So higher rated accounts and low risk-weighted assets only we are preferring because we have that pricing power because of the CASA we’re at 51%. So right at this moment for this financial year, there is no change in our approach as far as the business is concerned.

Sohail Halai — Antique Stock Broking Limited — Analyst

Understood, sir. Sir, second question relates to basically in terms of asset quality. We have seen a decline in slippages as well as your core credit cost, which you mentioned, excluding the one-off had come down to 90 basis points. Just wanted to understand that we also have a significant amount of written-off pool. This quarter also we had written-off around INR9,500 crores. So, sir, in your assessment for this year as well as next financial year, what is the kind of a credit cost that one should build? And are you looking at basically recovery from written-off account? How do we build that? Are you seeing any large account that could get resolved during the quarter?

M.V. Rao — Managing Director and Chief Executive Officer

As far as the credit cost is concerned, our aim is to be below 1.25% always. That our efforts will continue to be on that front regarding the credit cost, maintaining the credit cost. And that is a floor level what we are say — that is the sky level we are giving, but this time you’ve observed it is only 0.92%. And going forward, our efforts will be the same direction and credit cost will continue to be below 1%. That is one part.

Coming to the written-off, that is actually gold mine we are building up now. And this INR9,000 crores is also fully provided. That’s why we have taken the conscious decision of writing-off on technical front. This is a gold mine, and whatever the amount we recover that actually adds to my bottom line. And as far as any major accounts getting resolved, we’re not foreseeing anything for this December quarter. Probably by March some of the accounts may move to the NARCL. If at all if it happens, that will add to my bottom line.

Sohail Halai — Antique Stock Broking Limited — Analyst

But, sir, any sense that you can give? In terms of this recovery from write-off pool, what could be the recoverability whether it would be a 10%, 15%, 20%? So any ballpark number that you have in mind that probably from this pool this much could be recovered over a course or period?

M.V. Rao — Managing Director and Chief Executive Officer

No. For this March, I am not eyeing anything except if something comes out from the NARCL. From our efforts, we are foreseeing that almost 2% to 3% of recovery by September of next year. It is not in this financial year.

Sohail Halai — Antique Stock Broking Limited — Analyst

Understood. Sir, last question from my side. If I actually look at your other income breakup as well, so there is one thing, other receipts that PSLC and others, we are basically in terms of have significant amount of priority sector lending. But the PSLC fees is going down, so any light on that, like what is happening? We understand that the premium has also gone down. If so then, why?

M.V. Rao — Managing Director and Chief Executive Officer

See, in the recent past, if you see the RBI circular, they have enhanced the coverage of priority sector. The banks which were purchasing earlier because of this flexibility in the priority sector definition, now they don’t require that much because of the enhancing the bucket of the priority sector. So even in that, we could able to sold INR4,650 crores and almost INR200 crores we could able to realize from that. Going forward, I don’t think we are much more depending on this revenue stream as such on the PSLC. We also understand that much more activities and also raising the cap in the priority sector is pushing the rates down in the PSLC certificates there.

Sohail Halai — Antique Stock Broking Limited — Analyst

So, sir, will our strategy change towards PSL because we will do less of PSL, something like that, Priority sector lending? Because even the credit cost would be higher.

M.V. Rao — Managing Director and Chief Executive Officer

No, no. It is not the lesser PSLC because of enhancing the coverage. Even INR100 crores portfolio also in some of the activities it comes under priority sector. There I’m not having any limit for the — charging the ROI.

Sohail Halai — Antique Stock Broking Limited — Analyst

Okay.

M.V. Rao — Managing Director and Chief Executive Officer

So it’s not any hindrance for us in any way.

Sohail Halai — Antique Stock Broking Limited — Analyst

Understood, sir. Perfect. Sir, if I have any other questions, I’ll come back. And once again, sir, congratulations and all the best.

M.V. Rao — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. We have a question from the line of Ashok Ajmera from Ajcon Global Services Limited. Please go ahead.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Yeah. Thank you for giving this opportunity. And congratulations to you Rao sahab ji and entire team…

M.V. Rao — Managing Director and Chief Executive Officer

Thank you.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

For this fantastic set of numbers in this quarter 2. And also coming out finally from the PCA framework, which will give you at least some liberty, some leverage, some flexibility even though you’re not changing your business model because of that.

Sir, having said that I’ve got a couple of observations and questions and compliments to you for maintaining very good NIM. But the concerns on the cost to income and the credit cost remains, which you have explained to some extent, I would like to have a little more details of it that how would it come down. My some specific questions are there, sir, that if you look at the sanction pipeline in the corporate credit, these sanctions and disbursement if you see, as against INR11,248 crores of sanction to disbursement is about INR3,173 crores only. So only about 30% of the sanction. So whereas in other segments, it’s not so. So what is holding on? I mean is that the corporates are not drawing the limits, or there is a issue with some documentation or procedure completion? So why is that the disbursement is so low as compared to the sanctions in this particular quarter? This is my first question.

Second is, sir, on Note number 13, the fraud amount in this quarter of INR54 crores, out of which borrower fraud is around INR47.48 crore, and the provision during the quarter of INR2.3 crores, which means the bank holds full provision. So is it the full provision as per RBI norms or it’s 100% provision?

M.V. Rao — Managing Director and Chief Executive Officer

It is a 100%.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

No. I mean…

M.V. Rao — Managing Director and Chief Executive Officer

See, as per RBI if any fraud is identified, that can be amortized for the next two or three quarters within that financial year.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Yeah.

M.V. Rao — Managing Director and Chief Executive Officer

That option we have not exercised. Because we have enough resources, we have provided fully.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

So, sir, the provision is only INR2.3 crores whereas the fraud is — during the quarter is INR54 crores. The Note 13 says, Note number 13 if you read it out.

M.V. Rao — Managing Director and Chief Executive Officer

Just a minute.

Vivek Wahi — Executive Director

Ajmeraji, if an account where I am already holding 100% provision is identified as fraud now, I need not do any provision — additional provision.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

No, no. What I’m saying the wordings of that note. The fraud amount to INR54.03 crore in this quarter.

Vivek Wahi — Executive Director

Right. Sir, identified during…

M.V. Rao — Managing Director and Chief Executive Officer

See, what happens, sir, in these types of cases, these amounts were provided 100% even before declaring the account as fraud. Only in this quarter after due process, bank would have declared it as a fraud. And it doesn’t mean that we have not provided 100% for that.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

All right. Yeah, yeah. Point well taken, sir. Yeah, this was little confusing, so I thought we are saying 100% full provision and — anyway…

M.V. Rao — Managing Director and Chief Executive Officer

It appears only INR2.2 crores, yeah.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Yeah. INR2.3 crores only. Sir, there is a pressure on the agriculture credit. I mean, as we read in the newspaper and in the — like as we talk and the news are there, our agri portfolio is INR39,870 crores whereas the provision is around 6.7% or something. Do you see a pressure coming forward for more provisions in the agri portfolio?

M.V. Rao — Managing Director and Chief Executive Officer

No, sir. We don’t foresee much pressure as far as the asset quality is concerned because total NPA, net NPA, it stands at around 6.6%, and that is well within our control. And here also, sir, agriculture, nowadays it is not that the old system of only that KCC what we call crop loan.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Yes.

M.V. Rao — Managing Director and Chief Executive Officer

And in many of the states when any nearing to the election or something is coming people stop repayment, that type of risk we are slowly getting eliminated in terms of increasing the agricultural portfolio into the investment category.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Okay.

M.V. Rao — Managing Director and Chief Executive Officer

Agriculture investment it is a FPO of processing industry like that. So the original risk what we used to have is no more — much more predominant in our books right now.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Alright, sir. Sir, one is on treasury. Our treasury so far is managed very well. I mean, we don’t see — yeah, but sir going forward now, where do we stand, sir? Because now again the interest rates are still — there is a scope of hardening because the inflation is not coming under control. So where do you see, I mean, in the next two quarters? We will be able to manage without any major mark-to-market or investment loss in the investment book, sir?

M.V. Rao — Managing Director and Chief Executive Officer

Yeah, yeah. That is there. Full details our Vivek Wahi will give. Yeah.

Vivek Wahi — Executive Director

Ajmeraji, actually, see your question on hardening of yields is right to an extent because we are also having a view that yields will rise in — further rise maybe in next three to six months before at least stabilizing, if not coming down. But you see our SLR modified duration of SLR portfolio is just 1.16, so we have a very healthy modified duration here. And our P.V. 01 in our SLR portfolio is also just 2.43. So going forward, if you even touch to the level of even 7.75, we do not foresee any major MTM. And even for your information in September quarter also, we had in fact a reversal of more than INR100 crores here. So we do not foresee any major hits.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Alright. Then, my last question in this round, sir, is on the investment and the debentures and the bonds of INR33,898 crores. Sir, how much is the major percentage? I think must be in the well-secured and government bonds, but is there any investment in these bonds and debentures which are below AA?

Vivek Wahi — Executive Director

Sir, majorly, our core TD investment pertains to only — pertains presently to only AAA government PSUs or even some market AAA issuers whereas if you see the number, majority of it pertains to the bonds transferred to — from credit restructuring. So there we do not foresee any further depreciation sort of thing. So that portfolio is very limited, so I don’t see.

Our treasury investment is purely in AAA and all those AA and A’s, which we had done in COVID for those TLTROs or LTROs, they are all over. So now, the investor driven is only in AAA. And most of them are in PSUs instead of marquee AAA companies, maybe the names of HDFC sort of thing. That’s all.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Okay, sir. Great, sir. Thank you and all the best, and I’ll come back. I have couple of other questions, but time — if time permits, I’ll come back. Thank you.

Operator

[Operator Instructions] We have our next question from the line of Prabal from Ambit Capital. Please go ahead.

Prabal Gandhi — Ambit Capital — Analyst

All right. Thank you. Congrats, sir, on the good numbers. Sir, I want to get your trends on the growth in the deposits. So across all the banks and systems, we are seeing deposit growth slowing down even for us, the deposit growth has slowed down, what is the reason behind this?

M.V. Rao — Managing Director and Chief Executive Officer

Sir, as far as our bank is concerned, since our CD ratio in the previous year was 52%, we never focused more on increasing my liability portfolio. That’s why if you see the differential rate of current deposits, ours is one of the lowest rate of interest under current deposits. That’s why that growth is almost negative in the current deposits. As far as the CASA is concerned in FD and current there is a growth. And this time also now we have reached their 57.64% CD ratio, and we have enough resources — enough lendable resources but to be in the market in the previous also meeting, we have studied other bank deposit rates. And to protect our turf from the deposits side, we have also enhanced our rate of interest in certain buckets.

Prabal Gandhi — Ambit Capital — Analyst

Right. So you believe that despite having a — not only for us, so many case who hang on us, we have quite a good position on the buffer side of this tech to credit to deposit, but just to prevent the market share in a environment where deposits are not coming so easy, we are going to raise rates across markets?

M.V. Rao — Managing Director and Chief Executive Officer

No, no. That’s why in some of the buckets we have increased. See, if you see my reach, that is the network, we have 69% of my network is in the rural and semi-urban where in most of — in these areas, this is agnostic to the rate of interest. That we will continue to hold on to the deposits then. Even then because of other players are increasing, that’s what I told you, to protect our own turf we have increased the rate of interest in certain buckets after doing that analysis, and whatever the data we have, and historical runoff in that different periods. That we have taken into account and enhanced the rate of interest. That we will be continuing towards the percentage.

Prabal Gandhi — Ambit Capital — Analyst

Thank you. Very clear. Sir, on the corporate side, so the growth that is coming here, is it more of the utilization of previous sanction limits, or is it the new demand which is driving this?

M.V. Rao — Managing Director and Chief Executive Officer

See, in the corporate side, majority in between is on the infrastructure and specifically on the road side. There disbursements are — that is distributed over a period of 1 to — up to 370 to 400 days. So immediate pick up will not be there. That sanctions will be there and drawal will be as per the progress. So it’s not that unutilized limits but it is only the withdrawal so that has to happen during the course of time.

Prabal Gandhi — Ambit Capital — Analyst

Specifically, my question was [Technical Issues] getting driven by working capital?

Operator

Mr. Prabal, your voice is breaking. Can you repeat, please?

M.V. Rao — Managing Director and Chief Executive Officer

No, no. His voice is getting — yeah.

Prabal Gandhi — Ambit Capital — Analyst

Is it better now? Hello?

M.V. Rao — Managing Director and Chief Executive Officer

Yeah, yeah. Please?

Prabal Gandhi — Ambit Capital — Analyst

Yeah. Sir, actually, my question was that is the demand because of the working capital or is it the term demand that you are seeing? If you have to actually…

M.V. Rao — Managing Director and Chief Executive Officer

It’s not that only on the working capital side or on the term-loan side, but specifically, if you see that, I can put the figure of 60-40, 60% on the working capital side and 40% on the term-loan side.

Prabal Gandhi — Ambit Capital — Analyst

Understood. And next one is from your experience. You have to put a similar number, let’s say, few years back, then what would this ratio have been?

M.V. Rao — Managing Director and Chief Executive Officer

No, I didn’t get it. What is that? Two years back [Foreign Speech] term loan versus what we get there. That would be — term loan may be negligible.

Prabal Gandhi — Ambit Capital — Analyst

Okay. Okay. Thank you, sir. All the best.

M.V. Rao — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Sumair Sushil Choksey from Indus Equity Advisors Private Limited. Please go ahead.

Sumair Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Good afternoon, sir. Am I audible?

M.V. Rao — Managing Director and Chief Executive Officer

Yeah. Yeah, good afternoon. Yes.

Sumair Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Good afternoon. Sir, my congratulations on your results and a good set of numbers coming out of the PCA. So I had a few questions, sir. Firstly, given that we are out of PCA now, what would be our strategy for undertaking branch expansion? Would we be more aggressive in opening new branches now?

M.V. Rao — Managing Director and Chief Executive Officer

Sir, branch expansion, for the physical branch expansion, we’re not [Foreign Speech] on that, and wherever little things that are required by the government that is only may not be more than five to 10 year, that we’ll have to open, but as far as network is concerned, because we have already embarked on the digital journey and already we are in the process of bringing many more products on the digital line.

Further, since we have enhanced our BC reach, earlier it was — used to be 3,800 now we have 12,000. Now, we will be moving up to 15,000 as far as the BCs are concerned. So my customer touch points are moving up and the services which are being offered through BC outlet, we have enhanced from the earlier eight to nine services to the 38 services.

So we don’t foresee that presence of branch — a physical branch is required but banking services will be made available and we have the reach and also connect and the way we have tieing up with the partners like in co-lending and other tie-ups, that is going to help us. We are not going to increase the physical branch network.

Sumair Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Understood, sir. Sir, in your presentation, which you provided, on Slide 16 if we see, your unrated book has increased by 61% roughly year-on-year, so close to INR4,000 crores. Sir, so can you shed some light on the quality of borrowers in this portfolio?

M.V. Rao — Managing Director and Chief Executive Officer

See, unrated if you correlate with the previous line of BB and below, what happened in this bank, earlier, it was INR5 crores was the limit over and above each account has to be rated. When we have studied the other banks, some of the banks up to INR50 crores, they are not insisting for the rating. Majority of the banks, they have put the threshold level of INR25 crores and above for the rating.

In that scenario, what we have seen is good accounts having the — more than 100% collateral coverage and time-tested parties were moving away just because we are insisting for the rating. Yeah, it is a — for them, it is a cost also. So we have also increased our cap from INR5 crores to INR25 crores. That’s why many of these accounts have moved to the unrated category.

Sumair Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Understood, sir. Sir, and our co-lending book has seen some very robust growth. So if you look at it in terms of this financial year end, where could we see the numbers in terms of the book size ramping up to, purely on co-lending?

M.V. Rao — Managing Director and Chief Executive Officer

On co-lending, we are aiming around INR7,500 crores. That is the minimum floor we have kept for the ’23 March.

Sumair Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Got it, sir. And, sir, if we see what many other peers in the banking industry are looking to do, they’re cementing partnerships with a lot of Fintech players to grow businesses in a mutually beneficial manner, these entities at times tend to have expertise in terms of customer acquisition. So are we looking to leverage this and enter into any partnerships as much?

M.V. Rao — Managing Director and Chief Executive Officer

Yeah, yeah. That is happening from our side. That is happening.

Sumair Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Understood, sir. And, sir, so just as an add-on this, could shed some light on that. Would we be looking to use these guys to source customers for ourselves and once we acquire them provide further value upgrade products, is this something we’re looking at as a strategy?

M.V. Rao — Managing Director and Chief Executive Officer

Yeah, yeah. That we are looking at, and then in — already, we have started with a nimble foot at that, and then we are evaluating so that we are also getting the experience in handling these partners and also ultimate customers. These things are already started at our end and once we get confidence in that, we will move aggressively.

Sumair Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Understood, sir. Thank you. I have no further questions.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Sushil Choksey from Indus Equity Advisors. Please go ahead.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Sir, congratulation on the performance.

M.V. Rao — Managing Director and Chief Executive Officer

Congrats. Thank you.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Specific note for stable CASA and gradual performance too. Sir, now we reenergized ourselves coming out of all the hurdles, and with the core strength of CASA and the reach which we have developed over the years, where do we see the outlook accelerating from here and not seeking only numbers from a performance point? If I take a 12 to 18-month outlook, where do we figure in the stack where we — is it corporate or consumer or multiple digital or whatever is required?

M.V. Rao — Managing Director and Chief Executive Officer

Yes. This is a very big canvas painting you are asking but let me give you some glimpses of the big picture what we have. The co-lending partnership collaborations, Fintech, the area what we started in the previous year, now we are moving aggressively and probably in the total credit book of INR2 lakh crore credit book in the similar percentage, we are eyeing not less than 10% from these lines for this next 18 months.

And then, sourcing of the businesses and acquisition of the customers, it is — main stay will be through the brick and mortar channels because we have lots of presence rural and semi-urban but for the urban and metro, with the differentiated customer acquisition, we will be moving on to the digital channels.

This is the broad way of only putting the things how customers will be acquired, and as far as the businesses are concerned, we have the traditional businesses that we will continue to leverage, and then new businesses anyhow we have opened up one more vertical in the bank where general manager heading that emerging businesses. That he will be handling and that we’ll be expanding further. But to put the numbers, that will be very naive and also very difficult at this moment.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Sir, my next question was, where we stand today where our MCLR is concerned housing market led by Mr. Puri and the retail team or MSME LAP loans, how do we foresee ourselves as we grow faster than the industry to capture the market share because our strength in CASA and our MCLR be certainly?

M.V. Rao — Managing Director and Chief Executive Officer

Yeah, yeah. See that is very much evident from our this figures also what we have provided in a sense. This Y-to-Y growth in housing is 22% for me. So this is precisely because of the aggressiveness what we have on the housing portfolio. Likewise, the portfolios where we see that we have to move faster, always we leverage with our pricing.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Sir, I understand that we are grown and we are doing far better than many of our competitive peers or many other, but enablers because this is a very sensitive market, and the market can change the Central Bank into a better efficient job than where we stand from the past. So enabling those kind of prevailing situations which are in our favor, can we accelerate or can we sense that in second half or time to come, our growth will be much ahead of what is visible as of today? That’s what’s my question.

M.V. Rao — Managing Director and Chief Executive Officer

Yeah, yeah, exactly. That’s why I have changed my forecast of credit growth. Earlier we used to say 10% to 12%, now we have given 13% to 15% for this half year.

Vivek Wahi — Executive Director

While maintaining 35-65.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Okay. And secondly, sir, do we sense that housing can — similar way SME LAP, which many of these NBFCs are doing — borrowing from us and lending, or maybe consumer loans where average ticket is little reasonable today, those kind of loans also we will be able to do because we also taken digital initiatives?

M.V. Rao — Managing Director and Chief Executive Officer

Yeah, yeah, yeah. We are very much on the track. That’s why there was an increase in that portfolio. But as far as the unsecured loans are concerned, we are not moving with any aggressiveness and we have not opened up on the unsecured portfolio. On the secured with the mortgages whether it is SME or any business loan backed by the mortgages, that we are moving fast.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Sir, but these loans would be originated by a bank or this is under the co-lending moderate?

M.V. Rao — Managing Director and Chief Executive Officer

On both the sides. On co-lending also we are pursuing, and then banks on its own network also, we are getting that business.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

So is it possible that co-lending is a part in partnership where we may be doing 80-20, 70-30. But our own branch’s footfall and connectivity with so many customers who bank with us but their borrowings are with some other banks so that kind of gold mining would lead to a much better with our capital customers possible?

M.V. Rao — Managing Director and Chief Executive Officer

Exactly. That also through business analytics we are already moving onto that. That database is also ready with us and we are getting good results also on this.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

And I heard, sir, Wahi’s comment that we would do well for time to come with 7.75% on a 10 year reset too. Does it mean that we are churning and earning in current volatility of the market even today in the treasury?

Vivek Wahi — Executive Director

Yes, sir. Chokseyji, there is churning. In the rising yields scenario, churning does not have much scope. Only thing is that we want to — we may build some duration gradually. But as you see, our P.V.01 SLR is just 2.43 and our SLR AFS book is — the book which is really affected is hardly around INR10,000 crores. So that way we are protected. Even if there is a jump of around 30 to 40 basis points in the yield, our maximum hit would not be even cross INR50 crores. So that would not be some of — worry for us.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

But your experience is rewarding the bank, but can we take extra mileage for profitability even in this circumstance? That is my question.

Vivek Wahi — Executive Director

For the time being, we are cautious because it is a rising yield scenario. We don’t want to build duration. But going forward, for interest income, we are trying to manage and putting in some long-yielding papers. That’s all.

M.V. Rao — Managing Director and Chief Executive Officer

And one more lucrative opportunity that was explored is placements. That is yielding very good return on that, even to the extent of 7.8% to 7.9%. Around 8% also we are getting in that.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Sir, can you elaborate a bit on that?

Vivek Wahi — Executive Director

Sir, we have surplus the rupee funds and what we do is we do a buy/sell swap for these — with these rupee funds, which is back-to-back. And then, while buying dollars we place those dollars to needy — our Indian banks — India-based banks abroad who need dollar funds for their funding. So that — these buy/sell premium plus the interest on deposits that total yield, as MD sir is saying, that sometimes we even get to the extent of 8%. And all these swaps are ranging from three months to nine months and maximum one year. So that gives us a very decent income. And very few banks in the industry are doing it because you have to be surplus on the rupee side and you need to have lines with your overseas names. So…

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

That I understand.

Vivek Wahi — Executive Director

Right.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Sir, what about Indo-Zambia and Cent Home Finance?

Vivek Wahi — Executive Director

No, sorry. Cent Home Finance is a domestic subsidiary.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

No, no. What is outlook on that?

Vivek Wahi — Executive Director

Cent Home Finance outlook is we have fixed some decent numbers.

Unidentified Speaker —

What we have done in Cent Home Finances, that we have given a very aggressive target at this time because of the low base. We have gone in for the expansion of the branch network. We have gone in for the upgradation of technology. Therefore, the way forward even for Cent Bank also looks very good.

Vivek Wahi — Executive Director

And Indo-Zambia continues to be a good earning asset. Our investment remains is very old, it remains same, and we get a decent dividend every year. So that is a good earning asset — investment.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Okay. So congratulations to the team of Central Bank of India, and best wishes.

M.V. Rao — Managing Director and Chief Executive Officer

Thank you.

Vivek Wahi — Executive Director

Thank you.

Sushil Choksey — Indus Equity Advisors Private Limited — Analyst

Thank you.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Nimish Maheshwari from RSPN Ventures. Please go ahead.

Nimish Maheshwari — RSPN Ventures — Analyst

Hi.

M.V. Rao — Managing Director and Chief Executive Officer

Hello.

Nimish Maheshwari — RSPN Ventures — Analyst

Congratulation on good set of numbers, and I have two questions. First is the write-off during this quarter is INR9,500 crore, technical write-off. What this includes and how much recovery we expect moving on? And another question is provisions increase in this quarter, so can you little bit explain in the upcoming scenario what will be the trajectory in the provisioning?

M.V. Rao — Managing Director and Chief Executive Officer

See, as far as the write-off is concerned, all these accounts were provided with 100%. Only those accounts were picked up and we have gone for the technical write-off. As far as the recovery from — in these technical written-off accounts, we don’t foresee much recovery in this financial year. If at all if it comes, it is only adding to the bottom line. That’s all. That is one part. Second, coming to the provision is already what I explained regarding the credit cost part where front-loading of aging provision for the December quarter and part of March is also accounted for in our books for the September. This is how this provisions, the number is there. Any perspective you want here?

Nimish Maheshwari — RSPN Ventures — Analyst

So that will moderate in the upcoming quarters?

M.V. Rao — Managing Director and Chief Executive Officer

Exactly, exactly. That’s what is going to happen.

Vivek Wahi — Executive Director

We want to avoid the spikes which we’ll sometimes get due to aging provisions, so in order to insulate…

Nimish Maheshwari — RSPN Ventures — Analyst

It will be mostly below INR1,000 crores?

M.V. Rao — Managing Director and Chief Executive Officer

It is more than that. More than that we have accounted for.

Nimish Maheshwari — RSPN Ventures — Analyst

Yeah, in this quarter we accounted INR1,430 crores and we are expecting less than INR1,000 in the upcoming quarters.

M.V. Rao — Managing Director and Chief Executive Officer

Yes. Yeah.

Nimish Maheshwari — RSPN Ventures — Analyst

Okay. Got it. Thank you so much.

M.V. Rao — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you, sir. [Operator Instructions] As there are no more questions, I would now like to hand the conference over to Mr. Raju from Antique Stock Broking. Please go ahead, sir.

Raju —

Thank you, sir, for your detailed insights and giving us this opportunity to host the call. Once again, thank you.

M.V. Rao — Managing Director and Chief Executive Officer

Thank you. Thank you very much from our side. And we all wish you a very Happy Deepavali to you and your team.

Operator

[Operator Closing Remarks]